S&P lifts Mozambique

Standard & Poor’s said it raised the long-term foreign-currency sovereign credit ratings on the Republic of Mozambique to B- from SD (selective default), along with its short-term foreign-currency ratings to B from D.

S&P also said it affirmed the country’s local-currency long- and short-term sovereign credit ratings at B- and B, respectively.

The outlook is stable.

The agency said it deviated from the sovereign ratings calendar for this upgrade because Mozambique recently announced the completion of a debt exchange.

The upgrades are due to the completed debt exchange of loan participation notes issued by a special-purpose entity, Mozambique Ematum Finance 2020 BV, against dollar-denominated fixed-rate notes issued by Mozambique due in 2023, S&P said.

The new notes carry a bullet maturity of 2023 versus the LPNs that had semiannual amortization payments and a final maturity of 2020, the agency said.

The new notes carry a coupon of 10½% while the LPNs had a coupon of 6.305%, S&P added.

The agency said it believes this debt exchange helped the Mozambican government improve its near-term debt service payments by reducing debt servicing of principal plus interest payments of about $200 million per year.

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